The increasing adoption of embedded finance solutions has given prominence to non-financial institutions as a point of contact for customers. In turn, traditional financial service providers have been pushed into a background role.

Embedded finance is one of the biggest trends set to impact the financial industry this decade. The implementation of the PSD2 directive, and the introduction of open banking services, were the prelude to embedded finance, which has integrated certain banking services into retailer and e-commerce platform experiences.

According to Joris Hensen, founder and co-lead of the API programme at Deutsche Bank, embedded finance takes “banking products into different platforms and products, and through APIs, have the possibility to bring your products into new areas of the life of a customer.”

While embedded finance has empowered vendors to provide seamless and cost-efficient services, banks have had to reposition themselves to maintain relationships with their customers.

But there is a silver lining: embedded finance could push banks to innovate and adapt to retain their market share.

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